Why do we tolerate so many conflicts of interest?

June 6th, 2010

The news this weekend abounds with conflicts of interest:

*  Insider dealing (making a killing in buying or selling shares by using information to which one is privy inside an organisation, but which is not known to the public outside) persists in the City of London on a huge scale.   There were 1,485 tip-offs (‘suspicious transaction reports’) notified to the FSA over the last 5 years, leading to just 6 rogue dealers being convicted, compared with 584 in the US over the same period.   Why are we so complacent about this?

*  Notoriously the Financial Services Authority (FSA), the bank regulator, has failed over this issue to tackle the big names in the banking and trading establishment – unlike again what has happened in the US.   Might that be because the FSA is funded by the banking industry?

*  Equally the credit rating agencies that are supposed to assess the creditworthiness of financial and corporate institutions are, believe it or not, funded by those same institutions they’re assessing.   This is one major reason why banks or companies that were chock full of toxic derivatives that turned out to be worthless were nevertheless give top-level rating by the agencies.   Why has there been no outcry about this, no prosecution of the agencies for gross negligence and wilful incompetence, and no reform? (more…)

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